The amount of money organisations spend on IT will increase at an 11.7 per cent compound annual growth rate (CAGR) from $1.06 trillion in 1998 to $1.84 trillion in 2003, with services being the largest single drain on budgets.
At the ServiceTrends '99 conference, Mark Hodges, vice president and worldwide director at Data-quest, said that in 1998, users spent 24.1 per cent of their cash on professional services, with support services making up another 11.2 per cent. But by 2003, this will rise to 29.9 per cent and 9.4 per cent respectively.
He added: 'The amount of spend on services just keeps growing despite factors such as the recession. This is a function of the escalation in salaries, which makes it difficult for customers to retain key IT staff, as well as the effect of Moore's Law on hardware markets.'
Hodges predicted the fastest growing segment of the services market will be professional services, which will grow at a 17.5 per cent CAGR to $553 billion by 2003 from $247 billion in 1998. But business management services as a subset of this will outstrip growth elsewhere, showing a CAGR of 20.4 per cent, as customers increase the rate at which they outsource their business processes.
Software maintenance and support will show the next highest levels of growth, increasing in value to $49 billion by 2003 from $24 billion in 1998 at a CAGR of 15.7 per cent.
But hardware maintenance and support, which is largely a mature market, will grow at 5.6 per cent to $119 billion by 2003 from $91 billion in 1998. The fastest growing segment will be networking equipment, growing at 7.4 per cent to $27 billion in 2003.
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